AI
Thursday, January 18, 2007 9:37:59 PM
Market Update 070118
http://biz.yahoo.com/mu/update.html
4:20 pm : Stocks picked up Thursday where they left off a session earlier, trading lower, as the market took a hit from another sell-off in Technology. The Nasdaq plunged 1.5%, its biggest one-day decline in nearly two months. Oil prices dropping to 20-month lows also removed some notable leadership. Meanwhile, more evidence the Fed is not likely to ease anytime soon also weighed on sentiment and left valuations vulnerable.
Tech, which was this year's best performing S&P 500 sector (+3.9%) just two days ago, plunged again after disappointing Q2 guidance from Apple (AAPL 89.07 -5.88) overshadowed its blowout report. Apple, which closed at a record high on Tuesday, handily topped Wall Street expectations last night, prompting several brokers to raise their price targets. However, Mac units down sequentially for the first time in five years and Q2 EPS guidance falling short of consensus estimates resulted in a couple of analyst downgrades, providing an excuse to lock in recent gains. Dell (DELL 25.21 -0.63) tumbling 2.4% following reports that solidified rival Hewlett-Packard's (HPQ 42.34 -0.15) lead as No. 1 PC maker also weighed on Computer Hardware.
An area of tech that was even more disappointing, though, was Semiconductor Equipment. It was today's worst performing S&P industry group after Lam Research (LRCX 46.22 -7.91), saying shipment delays will weigh on this quarter's bottom line, exacerbated the mass exodus out of a sector that many were counting on to help the S&P 500 keep its winning streak of double-digit profit growth intact.
After briefly slipping below $50/bbl for the first time since May 2005, oil prices easily wiped out yesterday's 2.0% rebound. Crude for February delivery closed down 3.3% at $50.50/bbl following the first build in weekly crude supplies since November which was also the biggest gain since October 2004. While falling oil prices bode well for consumers, and will likely result in more encouraging reads in this month's total CPI figure, the market was also hung up on the fact that December's CPI report did not provide a clear indication of moderating inflation trends.
The market was also preoccupied with some commentary from Fed Chairman Bernanke just after the market opened. Bernanke warned of a possible "fiscal crisis" and added that, "If early and meaningful action is not taken [to lower the budget deficit], the U.S. economy could be seriously weakened." Even though his testimony made no mention of monetary policy, it acted as an overhang throughout the session.
On a positive note, unexpected increases in monthly housing starts and building permits provided further evidence that the housing market has bottomed out, removing the worst of recession fears. Be that as it may, the data also diminished the likelihood of policy makers cutting interest rates in early 2007.BTK -0.4% DJ30 -9.22 DJTA +0.2% DJUA -0.1% DOT -1.6% NASDAQ -36.21 NQ100 -1.9% R2K -1.4% SOX -3.9% SP400 -0.9% SP500 -4.25 XOI -0.6% NASDAQ Dec/Adv/Vol 2196/855/2.15 bln NYSE Dec/Adv/Vol 2010/1272/1.57 bln
3:30 pm : The indices are bouncing off their worst levels, but market breadth still remains decidedly bearish. As reflected in the A/D line, decliners outpace advancers on the NYSE by a 3-to-5 margin while those on the Nasdaq hold a more than 2-to-1 edge. A more than 5-to-1 ratio of down to up volume on the Composite paints an even more dismal picture for the huge disappointment that is tech today. Seven out of 10 sectors are still trading lower, with Technology down a disappointing 1.7%. DJ30 -15.16 NASDAQ -33.83 SP500 -4.35 NASDAQ Dec/Adv/Vol 2213/823/2.04 bln NYSE Dec/Adv/Vol 2025/1214/1.27 bln
3:00 pm : A renewed wave of selling interest within the last 30 minutes now has all three majors hitting fresh afternoon lows. In fact, the Nasdaq recently breaking through a key support level (2445) has exacerbated its move to the downside (-1.6%), leaving it on pace for its biggest one-day decline in nearly two months.
Not surprising, Technology (-2.0%) continues to be the biggest thorn in the market's side, as reflected in further deterioration throughout the sector, which currently accounts for six of today's ten worst performing S&P industry groups. Semiconductor Equipment (-6.3%) paces the way lower followed by Semiconductors (-2.6%), Application Software (-2.5%), Electronic Equipment Manufacturing (-2.4%), Computer Storage (-2.2%), Internet Software & Services (-2.0%).DJ30 -27.46 DOT -1.6% NASDAQ -40.10 SOX -3.8% SP500 -6.25 NASDAQ Dec/Adv/Vol 2170/843/1.84 bln NYSE Dec/Adv/Vol 1976/1239/1.15 bln
2:30 pm : As evidenced by the Dow still clinging to the smallest of gains, it's apparent that not all buyers have been sidelined, even if negative market internals tell a different story. However, since only 11 components are trading higher, it's not surprising to see that if not for seven (e.g. DIS, HD, JNJ, MRK, PFE, T, and VZ) of those components averaging intraday gains of 1.5%, the blue-chip index would be trading alongside the S&P 500 and Nasdaq in negative territory as the latter two have all afternoon.DJ30 +1.60 NASDAQ -30.44 SP500 -2.38 NASDAQ Dec/Adv/Vol 2120/887/1.69 bln NYSE Dec/Adv/Vol 1858/1337/1.05 bln
2:00 pm : Stocks remain mired in relatively tight trading ranges, with sellers still firmly in control. Bonds, on the other hand, continue to pare their morning losses and are currently at session highs. After briefly eclipsing a yield of 4.81%, following the unexpected increase in housing starts, the 10-year note is now up 6 ticks, pushing the yield down 4.75%. Be that as it may, the lack of catalysts to account for the continued improvement in Treasuries merely suggests that a more than one-month slide lifting yields to three-month highs is attracting some bargain hunters. DJ30 +2.16 NASDAQ -27.14 SP500 -2.07 NASDAQ Dec/Adv/Vol 2008/973/1.54 bln NYSE Dec/Adv/Vol 1746/1423/960 mln
1:30 pm : The blue-chip indices continue to trade with a tinge of caution, but the Nasdaq has recently taken a turn for the worse. The tech-heavy Composite is now down more than 1.0% and nearly halving its year-to-date leading 2.6% gain. While tech giants like AAPL (-4.3%), INTC (-1.9%), CSCO (-1.9%), GOOG (-1.2%), QCOM (-1.3%), ORCL (-1.8%), and AMAT (-5.8%) continue to account for the bulk of weakness, it is worth pointing out a few areas showing relative strength. Transports are up 1.2%, getting some help from Nasdaq-listed CHRW (+1.1%) and YRCW (+1.7%), while Retail is up 1.2%, benefiting from gains in stocks like SPLS (+1.6%), SHLD (+0.9%), AEOS (+2.3%), URBN (+1.1%), and PSUN (+1.3%).DJ30 +1.35 NASDAQ -28.60 SP500 -2.03 NASDAQ Dec/Adv/Vol 2006/948/1.43 bln NYSE Dec/Adv/Vol 1725/1426/890 mln
1:00 pm : More of the same for stocks as split industry leadership continues to dictate today's action. The Dow, though, is back in the green, getting a lift from further appreciation from the likes of JNJ, MRK, and PFE -- all three of which are up at least 1.0%. However, the Health Care sector's 0.3% advance continues to get overshadowed by the Tech sector tacking a 1.4% sell-off onto yesterday's 1.3% decline. Just two days ago, Technology was this year's best performing S&P 500 sector (+3.9%). The sector currently ranks sixth with a 1.1% year-to-date advance.DJ30 +5.72 NASDAQ -23.71 SOX -3.2% SP500 -1.68 NASDAQ Dec/Adv/Vol 1961/968/1.34 bln NYSE Dec/Adv/Vol 1762/1371/826 mln
12:30 pm : Stocks kick off the afternoon session retracing morning lows as a larger than expected rebound in regional manufacturing activity does little to get investors excited. After checking in with negative readings in three of the previous four months, the January Philadelphia Fed index rebounded to 8.3 (consensus 2.0), easing contraction concerns. The prices paid index falling to 11.9 also alleviates pricing pressures. Nonetheless, growing concerns about stock valuations reflecting a higher likelihood of a Fed easing continue to weigh on the proceedings.DJ30 -7.21 NASDAQ -25.35 SP500 -2.72 NASDAQ Dec/Adv/Vol 1926/988/1.23 bln NYSE Dec/Adv/Vol 1627/1480/754 mln
12:00 pm : The major indices are trading in split fashion midday as more mixed reads on the earnings and economic fronts, as well as volatile oil prices, leave investors questioning the sustainability of recent market gains.
Fed Chairman Bernanke warning of a possible "fiscal crisis" initially rattled investors when his prepared testimony before the Senate Budget Committee hit the wires at 10:00 ET. Bernanke added that, "If early and meaningful action is not taken [to lower the budget deficit], the U.S. economy could be seriously weakened."
Throw in no clear evidence of moderating inflation trends, after total CPI rose the most in December (+0.5%) since April and the core rate rose 0.2% from no change a month earlier, and buyers are still struggling to remove growing uncertainty about the Fed cutting interest rates anytime soon.
On a positive note, unexpected increases in monthly housing starts and building permits have provided further evidence that the housing market has bottomed out, removing the worst of recession fears. Oil prices plunging as much as 4.2% to $50.05/bbl earlier following weekly inventory builds across the board have also been noteworthy.
Per usual, however, oil's pullback subsequently removing key leadership from the Energy sector (-0.7%) and, more notably, another sell-off in Technology (-1.2%), remain the biggest obstacles for the bulls to overcome.
Last night, Apple (AAPL 91.28 -3.67) handily topped Wall Street expectations last night, prompting several brokers to raise their price targets. However, Mac units down sequentially for the first time in five years and Q2 EPS guidance falling short of consensus estimates have resulted in a couple of analyst downgrades, providing an excuse to take profits. Lam Research (LRCX 46.91 -7.22) saying shipment delays will weigh on this quarter's bottom line has also exacerbated the mass exodus out of a Tech sector that many were counting on to help the S&P 500 keep its winning streak of double-digit profit growth intact. BTK +0.1% DJ30 +6.12 DJTA +1.0% DJUA +0.1% DOT -1.0% NASDAQ -20.65 NQ100 -1.2% R2K -0.7% SOX -2.9% SP400 -0.3% SP500 -1.51 XOI -0.5% NASDAQ Dec/Adv/Vol 1922/960/1.10 bln NYSE Dec/Adv/Vol 1685/1408/664 mln
11:30 am : Range-bound trading persists in stocks as sellers remain in control of the action. It is worth noting, though, that some bargain-hunting interest in a handful of blue chips briefly resurfaced since the last update, but it was only enough to lift the Dow into positive territory for a few minutes. Of the 30 Dow components, 16 are still trading higher, led by gains of at least 1.0% from VZ, T, HD, and DIS. However, Intel (INTC 20.63 -0.41) tacking a 2% decline onto yesterday’s 5.7% drubbing, along with weakness in other tech names (e.g. HPQ -1.2%, IBM -0.7%, MSFT -0.4%) on the price-weighted index, continue to act as an overhang. DJ30 -10.98 NASDAQ -21.71 SP500 -3.25 NASDAQ Dec/Adv/Vol 1876/964/976 mln NYSE Dec/Adv/Vol 1657/1397/568 mln
11:00 am : Not much has changed since the last update as all three indices continue to languish near morning lows. Already under modest pressure heading into the Energy Dept.'s weekly report at 10:30 ET, oil prices have since extended their reach to the downside. Crude for February delivery is now at $50.30/bbl, selling off to the tune of 3.6% following inventory builds across the board. The biggest surprise was weekly crude supplies, not just rising for the first time in two months but surging 6.77 mln barrels to 321.5 mln -- the biggest gain since October 2004. Crude futures easily wiping out yesterday's 2.0% rebound also removes some notable leadership throughout the Energy sector which has now seen Wednesday's 1.2% advance disappear. DJ30 -15.04 NASDAQ -23.09 SP500 -2.93 XOI -0.7% NASDAQ Dec/Adv/Vol 1980/807/772 mln NYSE Dec/Adv/Vol 1785/1182/410 mln
10:30 am : The indices spike lower within the last 30 minutes as investors sift through Fed Chairman Bernanke's prepared testimony before the Senate Budget Committee. Bernanke has warned that rising entitlement obligations will put enormous pressure on the federal budget in coming years, which may lead to rapid growth in debt and interest payments. Bernanke added, "If early and meaningful action is not taken [to lower the budget deficit], the U.S. economy could be seriously weakened." DJ30 -12.01 NASDAQ -23.01 SP500 -2.70 NASDAQ Dec/Adv/Vol 1939/762/592 mln NYSE Dec/Adv/Vol 1688/1206/272 mln
10:00 am : Nine out of 10 sectors are now in positive territory, but another sell-off in Technology (-0.8%) still leaves the indices mixed. Apple (AAPL 91.63 -3.32) handily topped Wall Street expectations last night, prompting several brokers to raise their price targets. However, Mac units down sequentially for the first time in five years and Q2 EPS guidance falling short of consensus estimates have resulted in a couple of analyst downgrades and are providing an excuse to take profits. While Apple's disappointing outlook weighs on Computer Hardware (-1.3%), Semiconductor Equipment (-4.3%) is actually today's worst performing S&P industry group. The latter is tumbling after Lam Research (LRCX 48.52 -5.61) saying shipment delays will weigh on this quarter's bottom line overshadowed its better than expected Q2 earnings report. The stock is down 10%.DJ30 +34.12 NASDAQ -10.53 SOX -2.3% SP500 +2.19 NASDAQ Dec/Adv/Vol 1503/1011/270 mln NYSE Dec/Adv/Vol 1133/1565/104 mln
09:40 am : As futures trade presaged, stocks open with little fanfare as investors again find themselves juggling mixed economic and earnings news. With the Fed still keeping a close eye on inflation, today's influential CPI report has been a focal point. Total CPI rose the most in December (+0.5%) since April while the core rate rose 0.2% from no change in November, leaving an unclear read on inflation trends. The more surprising data, though, came in the form of unexpected increases in housing starts and building permits. While the data further diminish the likelihood of a Fed easing early this year, the reports from a GDP standpoint suggest that the freefall in housing is probably over. DJ30 +11.58 NASDAQ -5.25 SP500 +0.84 NASDAQ Vol 98 mln NYSE Vol 58 mln
09:15 am : S&P futures vs fair value: +2.8. Nasdaq futures vs fair value: -4.0.
09:00 am : S&P futures vs fair value: +2.8. Nasdaq futures vs fair value: -2.8. Upon further analysis of today's economic reports, both the S&P 500 and Nasdaq 100 futures have bounced off morning lows; but sentiment remains split. Rising energy costs contributed to total CPI rising the most since April, but even though that may prove temporary since oil prices have plunged about 20% over the last month there is still no clear indication about inflation trends. More encouraging, though, was an unexpected increase in starts and permits, which provides further evidence that the housing market has bottomed out and removes the worst of recession fears.
08:35 am : S&P futures vs fair value: +0.7. Nasdaq futures vs fair value: -6.0. Futures trade weakens within the last few minutes, taking a bearish cue from a sell-off in Treasuries following a batch of economic data. Total CPI rose 0.5% in December (consensus 0.4%) while the closely-watched core rate (ex-food and energy) rose 0.2%, matching forecasts. Dec. Housing starts unexpectedly rose 4.5% to 1.642 mln (consensus 1.57 mln) while building permits rose 5.5% to 1.596 mln (consensus 1.51 mln), reflective of more stabilization in housing. Initial claims unexpectedly fell 8K to 290K (consensus 315K), suggesting no weakness in labor conditions and lending credence to concerns about potential wage-based inflation. Bonds, which were down slightly ahead of the data, are weakening as the 10-yr note is now down 8 ticks to yield 4.80%.
08:00 am : S&P futures vs fair value: +1.2. Nasdaq futures vs fair value: -4.2. Early indications currently point to a mixed open for stocks. The disparity between buyers and sellers can be attributed to mixed earnings news and the impending arrival of several key economic reports. Apple (AAPL) had a blowout report last night, but its disappointing Q2 guidance is fueling more uncertainty throughout Technology. Merrill Lynch (MER) also handily topped Wall Street expectations, but its record results are helping S&P 500 futures maintain a slightly positive bias.
Of the economic data that may help set a more definitive tone to trading, the influential CPI report tops today's list, especially after yesterday's stronger than expected PPI data raised concerns about inflation at the wholesale level. Also garnering attention at 8:30 ET will be Dec. Housing Starts and Building Permits as well as Initial Claims.
06:18 am : S&P futures vs fair value: +3.0. Nasdaq futures vs fair value: +0.6.
http://biz.yahoo.com/mu/update.html
4:20 pm : Stocks picked up Thursday where they left off a session earlier, trading lower, as the market took a hit from another sell-off in Technology. The Nasdaq plunged 1.5%, its biggest one-day decline in nearly two months. Oil prices dropping to 20-month lows also removed some notable leadership. Meanwhile, more evidence the Fed is not likely to ease anytime soon also weighed on sentiment and left valuations vulnerable.
Tech, which was this year's best performing S&P 500 sector (+3.9%) just two days ago, plunged again after disappointing Q2 guidance from Apple (AAPL 89.07 -5.88) overshadowed its blowout report. Apple, which closed at a record high on Tuesday, handily topped Wall Street expectations last night, prompting several brokers to raise their price targets. However, Mac units down sequentially for the first time in five years and Q2 EPS guidance falling short of consensus estimates resulted in a couple of analyst downgrades, providing an excuse to lock in recent gains. Dell (DELL 25.21 -0.63) tumbling 2.4% following reports that solidified rival Hewlett-Packard's (HPQ 42.34 -0.15) lead as No. 1 PC maker also weighed on Computer Hardware.
An area of tech that was even more disappointing, though, was Semiconductor Equipment. It was today's worst performing S&P industry group after Lam Research (LRCX 46.22 -7.91), saying shipment delays will weigh on this quarter's bottom line, exacerbated the mass exodus out of a sector that many were counting on to help the S&P 500 keep its winning streak of double-digit profit growth intact.
After briefly slipping below $50/bbl for the first time since May 2005, oil prices easily wiped out yesterday's 2.0% rebound. Crude for February delivery closed down 3.3% at $50.50/bbl following the first build in weekly crude supplies since November which was also the biggest gain since October 2004. While falling oil prices bode well for consumers, and will likely result in more encouraging reads in this month's total CPI figure, the market was also hung up on the fact that December's CPI report did not provide a clear indication of moderating inflation trends.
The market was also preoccupied with some commentary from Fed Chairman Bernanke just after the market opened. Bernanke warned of a possible "fiscal crisis" and added that, "If early and meaningful action is not taken [to lower the budget deficit], the U.S. economy could be seriously weakened." Even though his testimony made no mention of monetary policy, it acted as an overhang throughout the session.
On a positive note, unexpected increases in monthly housing starts and building permits provided further evidence that the housing market has bottomed out, removing the worst of recession fears. Be that as it may, the data also diminished the likelihood of policy makers cutting interest rates in early 2007.BTK -0.4% DJ30 -9.22 DJTA +0.2% DJUA -0.1% DOT -1.6% NASDAQ -36.21 NQ100 -1.9% R2K -1.4% SOX -3.9% SP400 -0.9% SP500 -4.25 XOI -0.6% NASDAQ Dec/Adv/Vol 2196/855/2.15 bln NYSE Dec/Adv/Vol 2010/1272/1.57 bln
3:30 pm : The indices are bouncing off their worst levels, but market breadth still remains decidedly bearish. As reflected in the A/D line, decliners outpace advancers on the NYSE by a 3-to-5 margin while those on the Nasdaq hold a more than 2-to-1 edge. A more than 5-to-1 ratio of down to up volume on the Composite paints an even more dismal picture for the huge disappointment that is tech today. Seven out of 10 sectors are still trading lower, with Technology down a disappointing 1.7%. DJ30 -15.16 NASDAQ -33.83 SP500 -4.35 NASDAQ Dec/Adv/Vol 2213/823/2.04 bln NYSE Dec/Adv/Vol 2025/1214/1.27 bln
3:00 pm : A renewed wave of selling interest within the last 30 minutes now has all three majors hitting fresh afternoon lows. In fact, the Nasdaq recently breaking through a key support level (2445) has exacerbated its move to the downside (-1.6%), leaving it on pace for its biggest one-day decline in nearly two months.
Not surprising, Technology (-2.0%) continues to be the biggest thorn in the market's side, as reflected in further deterioration throughout the sector, which currently accounts for six of today's ten worst performing S&P industry groups. Semiconductor Equipment (-6.3%) paces the way lower followed by Semiconductors (-2.6%), Application Software (-2.5%), Electronic Equipment Manufacturing (-2.4%), Computer Storage (-2.2%), Internet Software & Services (-2.0%).DJ30 -27.46 DOT -1.6% NASDAQ -40.10 SOX -3.8% SP500 -6.25 NASDAQ Dec/Adv/Vol 2170/843/1.84 bln NYSE Dec/Adv/Vol 1976/1239/1.15 bln
2:30 pm : As evidenced by the Dow still clinging to the smallest of gains, it's apparent that not all buyers have been sidelined, even if negative market internals tell a different story. However, since only 11 components are trading higher, it's not surprising to see that if not for seven (e.g. DIS, HD, JNJ, MRK, PFE, T, and VZ) of those components averaging intraday gains of 1.5%, the blue-chip index would be trading alongside the S&P 500 and Nasdaq in negative territory as the latter two have all afternoon.DJ30 +1.60 NASDAQ -30.44 SP500 -2.38 NASDAQ Dec/Adv/Vol 2120/887/1.69 bln NYSE Dec/Adv/Vol 1858/1337/1.05 bln
2:00 pm : Stocks remain mired in relatively tight trading ranges, with sellers still firmly in control. Bonds, on the other hand, continue to pare their morning losses and are currently at session highs. After briefly eclipsing a yield of 4.81%, following the unexpected increase in housing starts, the 10-year note is now up 6 ticks, pushing the yield down 4.75%. Be that as it may, the lack of catalysts to account for the continued improvement in Treasuries merely suggests that a more than one-month slide lifting yields to three-month highs is attracting some bargain hunters. DJ30 +2.16 NASDAQ -27.14 SP500 -2.07 NASDAQ Dec/Adv/Vol 2008/973/1.54 bln NYSE Dec/Adv/Vol 1746/1423/960 mln
1:30 pm : The blue-chip indices continue to trade with a tinge of caution, but the Nasdaq has recently taken a turn for the worse. The tech-heavy Composite is now down more than 1.0% and nearly halving its year-to-date leading 2.6% gain. While tech giants like AAPL (-4.3%), INTC (-1.9%), CSCO (-1.9%), GOOG (-1.2%), QCOM (-1.3%), ORCL (-1.8%), and AMAT (-5.8%) continue to account for the bulk of weakness, it is worth pointing out a few areas showing relative strength. Transports are up 1.2%, getting some help from Nasdaq-listed CHRW (+1.1%) and YRCW (+1.7%), while Retail is up 1.2%, benefiting from gains in stocks like SPLS (+1.6%), SHLD (+0.9%), AEOS (+2.3%), URBN (+1.1%), and PSUN (+1.3%).DJ30 +1.35 NASDAQ -28.60 SP500 -2.03 NASDAQ Dec/Adv/Vol 2006/948/1.43 bln NYSE Dec/Adv/Vol 1725/1426/890 mln
1:00 pm : More of the same for stocks as split industry leadership continues to dictate today's action. The Dow, though, is back in the green, getting a lift from further appreciation from the likes of JNJ, MRK, and PFE -- all three of which are up at least 1.0%. However, the Health Care sector's 0.3% advance continues to get overshadowed by the Tech sector tacking a 1.4% sell-off onto yesterday's 1.3% decline. Just two days ago, Technology was this year's best performing S&P 500 sector (+3.9%). The sector currently ranks sixth with a 1.1% year-to-date advance.DJ30 +5.72 NASDAQ -23.71 SOX -3.2% SP500 -1.68 NASDAQ Dec/Adv/Vol 1961/968/1.34 bln NYSE Dec/Adv/Vol 1762/1371/826 mln
12:30 pm : Stocks kick off the afternoon session retracing morning lows as a larger than expected rebound in regional manufacturing activity does little to get investors excited. After checking in with negative readings in three of the previous four months, the January Philadelphia Fed index rebounded to 8.3 (consensus 2.0), easing contraction concerns. The prices paid index falling to 11.9 also alleviates pricing pressures. Nonetheless, growing concerns about stock valuations reflecting a higher likelihood of a Fed easing continue to weigh on the proceedings.DJ30 -7.21 NASDAQ -25.35 SP500 -2.72 NASDAQ Dec/Adv/Vol 1926/988/1.23 bln NYSE Dec/Adv/Vol 1627/1480/754 mln
12:00 pm : The major indices are trading in split fashion midday as more mixed reads on the earnings and economic fronts, as well as volatile oil prices, leave investors questioning the sustainability of recent market gains.
Fed Chairman Bernanke warning of a possible "fiscal crisis" initially rattled investors when his prepared testimony before the Senate Budget Committee hit the wires at 10:00 ET. Bernanke added that, "If early and meaningful action is not taken [to lower the budget deficit], the U.S. economy could be seriously weakened."
Throw in no clear evidence of moderating inflation trends, after total CPI rose the most in December (+0.5%) since April and the core rate rose 0.2% from no change a month earlier, and buyers are still struggling to remove growing uncertainty about the Fed cutting interest rates anytime soon.
On a positive note, unexpected increases in monthly housing starts and building permits have provided further evidence that the housing market has bottomed out, removing the worst of recession fears. Oil prices plunging as much as 4.2% to $50.05/bbl earlier following weekly inventory builds across the board have also been noteworthy.
Per usual, however, oil's pullback subsequently removing key leadership from the Energy sector (-0.7%) and, more notably, another sell-off in Technology (-1.2%), remain the biggest obstacles for the bulls to overcome.
Last night, Apple (AAPL 91.28 -3.67) handily topped Wall Street expectations last night, prompting several brokers to raise their price targets. However, Mac units down sequentially for the first time in five years and Q2 EPS guidance falling short of consensus estimates have resulted in a couple of analyst downgrades, providing an excuse to take profits. Lam Research (LRCX 46.91 -7.22) saying shipment delays will weigh on this quarter's bottom line has also exacerbated the mass exodus out of a Tech sector that many were counting on to help the S&P 500 keep its winning streak of double-digit profit growth intact. BTK +0.1% DJ30 +6.12 DJTA +1.0% DJUA +0.1% DOT -1.0% NASDAQ -20.65 NQ100 -1.2% R2K -0.7% SOX -2.9% SP400 -0.3% SP500 -1.51 XOI -0.5% NASDAQ Dec/Adv/Vol 1922/960/1.10 bln NYSE Dec/Adv/Vol 1685/1408/664 mln
11:30 am : Range-bound trading persists in stocks as sellers remain in control of the action. It is worth noting, though, that some bargain-hunting interest in a handful of blue chips briefly resurfaced since the last update, but it was only enough to lift the Dow into positive territory for a few minutes. Of the 30 Dow components, 16 are still trading higher, led by gains of at least 1.0% from VZ, T, HD, and DIS. However, Intel (INTC 20.63 -0.41) tacking a 2% decline onto yesterday’s 5.7% drubbing, along with weakness in other tech names (e.g. HPQ -1.2%, IBM -0.7%, MSFT -0.4%) on the price-weighted index, continue to act as an overhang. DJ30 -10.98 NASDAQ -21.71 SP500 -3.25 NASDAQ Dec/Adv/Vol 1876/964/976 mln NYSE Dec/Adv/Vol 1657/1397/568 mln
11:00 am : Not much has changed since the last update as all three indices continue to languish near morning lows. Already under modest pressure heading into the Energy Dept.'s weekly report at 10:30 ET, oil prices have since extended their reach to the downside. Crude for February delivery is now at $50.30/bbl, selling off to the tune of 3.6% following inventory builds across the board. The biggest surprise was weekly crude supplies, not just rising for the first time in two months but surging 6.77 mln barrels to 321.5 mln -- the biggest gain since October 2004. Crude futures easily wiping out yesterday's 2.0% rebound also removes some notable leadership throughout the Energy sector which has now seen Wednesday's 1.2% advance disappear. DJ30 -15.04 NASDAQ -23.09 SP500 -2.93 XOI -0.7% NASDAQ Dec/Adv/Vol 1980/807/772 mln NYSE Dec/Adv/Vol 1785/1182/410 mln
10:30 am : The indices spike lower within the last 30 minutes as investors sift through Fed Chairman Bernanke's prepared testimony before the Senate Budget Committee. Bernanke has warned that rising entitlement obligations will put enormous pressure on the federal budget in coming years, which may lead to rapid growth in debt and interest payments. Bernanke added, "If early and meaningful action is not taken [to lower the budget deficit], the U.S. economy could be seriously weakened." DJ30 -12.01 NASDAQ -23.01 SP500 -2.70 NASDAQ Dec/Adv/Vol 1939/762/592 mln NYSE Dec/Adv/Vol 1688/1206/272 mln
10:00 am : Nine out of 10 sectors are now in positive territory, but another sell-off in Technology (-0.8%) still leaves the indices mixed. Apple (AAPL 91.63 -3.32) handily topped Wall Street expectations last night, prompting several brokers to raise their price targets. However, Mac units down sequentially for the first time in five years and Q2 EPS guidance falling short of consensus estimates have resulted in a couple of analyst downgrades and are providing an excuse to take profits. While Apple's disappointing outlook weighs on Computer Hardware (-1.3%), Semiconductor Equipment (-4.3%) is actually today's worst performing S&P industry group. The latter is tumbling after Lam Research (LRCX 48.52 -5.61) saying shipment delays will weigh on this quarter's bottom line overshadowed its better than expected Q2 earnings report. The stock is down 10%.DJ30 +34.12 NASDAQ -10.53 SOX -2.3% SP500 +2.19 NASDAQ Dec/Adv/Vol 1503/1011/270 mln NYSE Dec/Adv/Vol 1133/1565/104 mln
09:40 am : As futures trade presaged, stocks open with little fanfare as investors again find themselves juggling mixed economic and earnings news. With the Fed still keeping a close eye on inflation, today's influential CPI report has been a focal point. Total CPI rose the most in December (+0.5%) since April while the core rate rose 0.2% from no change in November, leaving an unclear read on inflation trends. The more surprising data, though, came in the form of unexpected increases in housing starts and building permits. While the data further diminish the likelihood of a Fed easing early this year, the reports from a GDP standpoint suggest that the freefall in housing is probably over. DJ30 +11.58 NASDAQ -5.25 SP500 +0.84 NASDAQ Vol 98 mln NYSE Vol 58 mln
09:15 am : S&P futures vs fair value: +2.8. Nasdaq futures vs fair value: -4.0.
09:00 am : S&P futures vs fair value: +2.8. Nasdaq futures vs fair value: -2.8. Upon further analysis of today's economic reports, both the S&P 500 and Nasdaq 100 futures have bounced off morning lows; but sentiment remains split. Rising energy costs contributed to total CPI rising the most since April, but even though that may prove temporary since oil prices have plunged about 20% over the last month there is still no clear indication about inflation trends. More encouraging, though, was an unexpected increase in starts and permits, which provides further evidence that the housing market has bottomed out and removes the worst of recession fears.
08:35 am : S&P futures vs fair value: +0.7. Nasdaq futures vs fair value: -6.0. Futures trade weakens within the last few minutes, taking a bearish cue from a sell-off in Treasuries following a batch of economic data. Total CPI rose 0.5% in December (consensus 0.4%) while the closely-watched core rate (ex-food and energy) rose 0.2%, matching forecasts. Dec. Housing starts unexpectedly rose 4.5% to 1.642 mln (consensus 1.57 mln) while building permits rose 5.5% to 1.596 mln (consensus 1.51 mln), reflective of more stabilization in housing. Initial claims unexpectedly fell 8K to 290K (consensus 315K), suggesting no weakness in labor conditions and lending credence to concerns about potential wage-based inflation. Bonds, which were down slightly ahead of the data, are weakening as the 10-yr note is now down 8 ticks to yield 4.80%.
08:00 am : S&P futures vs fair value: +1.2. Nasdaq futures vs fair value: -4.2. Early indications currently point to a mixed open for stocks. The disparity between buyers and sellers can be attributed to mixed earnings news and the impending arrival of several key economic reports. Apple (AAPL) had a blowout report last night, but its disappointing Q2 guidance is fueling more uncertainty throughout Technology. Merrill Lynch (MER) also handily topped Wall Street expectations, but its record results are helping S&P 500 futures maintain a slightly positive bias.
Of the economic data that may help set a more definitive tone to trading, the influential CPI report tops today's list, especially after yesterday's stronger than expected PPI data raised concerns about inflation at the wholesale level. Also garnering attention at 8:30 ET will be Dec. Housing Starts and Building Permits as well as Initial Claims.
06:18 am : S&P futures vs fair value: +3.0. Nasdaq futures vs fair value: +0.6.
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